from the 21st-century-trends dept

While the 20th century was defined by mass production, since the digital revolution there has been talk about what might be the main trend of the 21st century: mass customization. Today, we're starting to see customizable mass-produced offerings pop up in a number of spaces such as apparel, and this week we discuss whether mass customization is finally approaching critical mass.

from the urls-we-dig-up dept

Algorithms have already quietly crept into nearly every part of our lives, helping us to search the internet and connect with friends and to find matching personalities for dates. Soon, we'll have cars that drive us -- and some old Yakov Smirnoff jokes won't make any sense. But how will people adapt to a 'robot economy' where everything is done by robots -- and we can't even play games without knowing that the computers are just letting us win?

Will automation create jobs or just destroy them? Tech optimists seem to think that we're headed for a life of leisure as robots take over menial tasks and open up more careers that require compassion, creativity and leadership skills. Maybe we'll have more philosophers and physicists -- and basic income guarantees in a Star Trek-like future. [url]

After you've finished checking out those links, take a look at our Daily Deals for cool gadgets and other awesome stuff.

from the urls-we-dig-up dept

Most homes don't have a 3D printer... yet. But just as most homes didn't have a "computer" or an internet connection just a few years ago, technology can change quickly, and 3D printers could become ubiquitous relatively quickly. With 3D printers in your kitchen or living room, you could print up a Left Shark whenever you felt like it, but hopefully, no one will be doing that too often. If you already have a MakerBot or some other 3D printer, check out a few other developments that could be nice to have.

from the urls-we-dig-up dept

Robots are moving towards taking over more tasks that are boring and/or unpleasant for people to do. Some folks are concerned that robots will replace too many human jobs, but it'll take some time before robots are cheap enough to really replace a lot of people. Still, it really is just a matter of time before robot costs come down, so we'd better start preparing for the inevitable. Here are just a few robot projects that are trying to play nice with us.

from the take-a-listen dept

This week is the big Consumer Electronics Show -- and, like many in the tech field, I'm here in Las Vegas exploring the various gadgets that are coming out. Many (some might say most, though I'm not sure that's true) of the gadgets here are made in China. So it's interesting timing that the always excellent radio program This American Life chose this particular week to run its episode on what happens in the electronics factories in Shenzen, China. Most of the episode involves a rather gripping story from storyteller Mike Daisey (who first came to fame almost exactly a decade ago talking about his life working at Amazon.com). Daisey's latest one-man show is all about Apple and Steve Jobs -- and this segment was adapted from a part of that show. The second act of the show involves This American Life host Ira Glass, looking to fact check many of the claims that Daisey makes -- many of which do, in fact, seem to check out. Of course, the two biggest companies at the center of the story -- Apple and the infamous Foxconn -- refuse to take part. The whole thing is worth listening to, in part because Daisey really is a fantastic storyteller (something I didn't think was true a decade ago, but as I think he's gotten progressively better over the years).

While I won't go into all of the details of the story, there were two separate points that I found especially interesting. The first was what maybe seemed like a minor aside in Daisey's monologue: that almost all the work done in these factories is done by hand. He noted that, in his imagination, if he ever really thought about these plants, he imagined them being like the robotic Japanese auto plants he'd seen videos about years ago -- only the robots would be smaller, since the gadgets are smaller than cars. But, the truth is that everything is done by hand -- and that's, in part, because labor is so ridiculously cheap in China. And then he notes that we always hear people who decry the fact that everything is mass produced by these machines, and clamor for handmade products. And he notes that, perhaps, we don't really want handmade products -- because all these gadgets really are handmade, and it's not a pleasant experience.

The second point, however, goes in a different direction. It comes during the "fact check" portion of the show, in which multiple observers -- including Paul Krugman and Nicholas Kristof -- note that, for as bad as the factories may seem relative to what we have today in the US, the conditions and opportunities are significantly better than where those workers came from. Furthermore, another commentator notes, over the last few years, conditions at these plants has been improving -- and it isn't necessarily because of pressure from companies or the government instituting any kind of labor reforms. It is, instead, because competition for workers has increased -- and turnover is massive: in some cases upwards of 20% per month. That's an insane level of turnover -- and a costly one. Even in a "sweatshop" type setting, the costs of replacing a worker can be high, and the end result is that these companies do have incentives to improve, and to offer a better deal and better conditions in factories. None of this is to excuse the dangerous working conditions (in some cases easily avoidable), the physical neglect of employees, or the occasional employment of under-age workers. But it does make you wonder what the "solution" to all of this would be. Daisey says the answer is labor standards -- and that may very well be a workable solution. But it might also mean that some of the workers, who start from the same place as those who were able to build themselves up from incredibly poor to a form of middle class, might never get that chance.

It's a situation where there certainly aren't easy answers. Personally, I think that if there were more transparency (and perhaps shows like this one can help), that could drive social pressure to improve the worst of the worst working conditions, as companies should be reasonably ashamed for abusing their employees'. And that level of transparency itself can come from social pressure. Indeed, while Apple and Foxconn refused to take part in the show, Apple (at least) has been continuously pressured to be more transparent about these things, and (as the episode notes) in some ways it does do a lot more than other companies -- though many would argue not nearly enough. In the end, hopefully pressure both from competitive forces for workers along with public pressure to stop horrible treatment can lead to a situation where the conditions in these factories really do significantly improve. And maybe, in the end, that actually does lead to more automation, and the miniaturized robotic automobile factories Daisey imagined. And then people can really complain about a lack of handmade goods. But, it might just be better for the employees themselves in the long run.

Now, as always, his position is deeply nuanced, and not as simplistic as the typical calls for US job protectionism. He talks up the importance of job "scaling" in the US economy:

Startups are a wonderful thing, but they cannot by themselves increase tech employment. Equally important is what comes after that mythical moment of creation in the garage, as technology goes from prototype to mass production. This is the phase where companies scale up. They work out design details, figure out how to make things affordably, build factories, and hire people by the thousands. Scaling is hard work but necessary to make innovation matter.

The scaling process is no longer happening in the U.S. And as long as that's the case, plowing capital into young companies that build their factories elsewhere will continue to yield a bad return in terms of American jobs.

Scaling used to work well in Silicon Valley. Entrepreneurs came up with an invention. Investors gave them money to build their business. If the founders and their investors were lucky, the company grew and had an initial public offering, which brought in money that financed further growth.

First of all, I'm not convinced he's right that the scaling doesn't happen in Silicon Valley. The same day that Grove's column was released, Tom Foremski had a short post about the hockey-stick-like job growth at Silicon Valley's most popular companies, where even he worried that such scaling -- which does appear to be happening -- might "crowd out" other startups. So, we have Andy Grove saying Silicon Valley startups can't scale from an employment standpoint just at the same time the data shows that they still do...

But as we dig a bit deeper into the article, we find out what Grove's real concern is. It's not that jobs aren't scaling, but which kind of jobs are scaling. And, to Grove, the problem is that we're no longer scaling manufacturing jobs:

Today, manufacturing employment in the U.S. computer industry is about 166,000 -- lower than it was before the first personal computer, the MITS Altair 2800, was assembled in 1975. Meanwhile, a very effective computer-manufacturing industry has emerged in Asia, employing about 1.5 million workers -- factory employees, engineers and managers.

I'm kind of surprised that Grove would make this argument. From David Ricardo, writing 200 years ago, forward, the concept of comparative advantage is pretty well-established. Now, there definitely are some recent critiques of the concept of comparative advantage, and one major concern is whether or not it really applies in a globalized world, but the general theory still seems valid: if it's more efficient and economical (other things equal) for manufacturing to take place in China, then it should actually make the US better off. Now, obviously, reality is more complex than theory, and there are other considerations as well, including human rights, quality, and even safety (lead in toys and poisoned toothpaste, anyone?). But, on the whole, that's not what Grove is talking about. Instead, his main worry seems to be that if we lose our manufacturing prowess in certain tech fields, it actually puts us behind the curve in important new fields:

There's more at stake than exported jobs. With some technologies, both scaling and innovation take place overseas. Such is the case with advanced batteries. It has taken years and many false starts, but finally we are about to witness mass- produced electric cars and trucks. They all rely on lithium-ion batteries. What microprocessors are to computing, batteries are to electric vehicles. Unlike with microprocessors, the U.S. share of lithium-ion battery production is tiny.

That's a problem. A new industry needs an effective ecosystem in which technology knowhow accumulates, experience builds on experience, and close relationships develop between supplier and customer. The U.S. lost its lead in batteries 30 years ago when it stopped making consumer-electronics devices. Whoever made batteries then gained the exposure and relationships needed to learn to supply batteries for the more demanding laptop PC market, and after that, for the even more demanding automobile market. U.S. companies didn't participate in the first phase and consequently weren't in the running for all that followed. I doubt they will ever catch up.

Now, I will agree that this is a point that got me thinking. It certainly fits well with our recent post about how scientific knowledge advances, where the research has shown that those who aren't actively involved in a particular field simply can't understand that field enough to stay innovative or competitive in that field. So, the real question is whether or not the jobs that are being offshored are really the ones in areas where the US needs to be that knowledgeable... and also whether or not the knowledge transfer really is that complete. If, as is sometimes the case, the design work still really takes place in the US, but the manufacturing takes place in China, which bit of knowledge is more important?

I can understand where Grove is coming from. While many people still think that Intel's advantage was in its chip design, that was never really the case. It was always its manufacturing capabilities that put the company ahead. Intel's manufacturing expertise meant that its yield rates (effectively, the percentage of silicon that was successfully turned into a working computer chip) were always significantly higher than competitors, allowing Intel to produce more at a lower cost, and keep its margins higher. So, it's no wonder that Grove would focus in on manufacturing expertise as being key. But there is more to innovation than just manufacturing.

Grove reiterates the same point later in the article, but makes a big assumption:

Consider this passage by Princeton University economist Alan S. Blinder: "The TV manufacturing industry really started here, and at one point employed many workers. But as TV sets became 'just a commodity,' their production moved offshore to locations with much lower wages. And nowadays the number of television sets manufactured in the U.S. is zero. A failure? No, a success."

I disagree. Not only did we lose an untold number of jobs, we broke the chain of experience that is so important in technological evolution. As happened with batteries, abandoning today's "commodity" manufacturing can lock you out of tomorrow's emerging industry.

But you could make the same argument with plenty of industries that went overseas, or were more automated, that didn't end up harming the US. The textile industry was once a huge domestic industry, but much of it has gone overseas, and because of that, we tend to have cheaper clothing for everyone. Again, there are issues there to be aware of, such as human rights and sweatshops -- something I'm not defending -- but it's not clear that jobs going overseas automatically means harm to the economy, as Grove implies.

Grove then challenges the "free market" orthodoxy by pointing to the growth of certain east Asian economies in the 70s and 80s that were largely due to heavy government involvement and planning:

Consider the "Golden Projects," a series of digital initiatives driven by the Chinese government in the late 1980s and 1990s. Beijing was convinced of the importance of electronic networks -- used for transactions, communications and coordination -- in enabling job creation, particularly in the less developed parts of the country. Consequently, the Golden Projects enjoyed priority funding. In time, they contributed to the rapid development of China's information infrastructure and the country's economic growth.

Indeed, that's undoubtedly true. But Grove is playing a bit of a game with confirmation bias on this one. Yes, certain government mandates worked well for certain countries, but some of them also had governments force them to bet on the wrong technology. Japan bet on certain technologies (like HDTV) too soon, and discovered that they got leapfrogged in the market. Sometimes, it's absolutely true, a government can help an industry develop, but often it can push an industry down the wrong road. To ignore that is dangerous. In fact, we were just discussing how some of Japan's choices pushing certain industries have had long term negative consequences in terms of Japanese domestic efficiency and innovation.

Protectionism leads to perverse incentives that can absolutely work against long term growth and innovation.

Yet, Grove goes so far as to suggest that we should put a tax on offshoring and try to force companies to keep certain types of jobs in the US:

We should develop a system of financial incentives: Levy an extra tax on the product of offshored labor. (If the result is a trade war, treat it like other wars -- fight to win.) Keep that money separate. Deposit it in the coffers of what we might call the Scaling Bank of the U.S. and make these sums available to companies that will scale their American operations. Such a system would be a daily reminder that while pursuing our company goals, all of us in business have a responsibility to maintain the industrial base on which we depend and the society whose adaptability -- and stability -- we may have taken for granted.

Yikes! Grove should certainly know that the history of trade wars -- even when you "fight to win" is not pretty for any of the countries involved in those wars. They lead to less growth, less innovation and higher prices. They're incredibly dangerous, and the unintended consequences do significantly more harm than good.

Besides, how do you pick the "good jobs" from the jobs we're actually better off offshoring. Nearly every day we hear stories about attempts by the US government to protect jobs in a particular industry. Just look at US telco policy or US copyright policy -- both of which are very much designed to prop up less efficient companies in the industry, at the expense of more innovative, more efficient upstarts. Protecting jobs comes at a cost to efficiency. If we always had a policy of "protecting jobs," then we never would have automated the telephone switching system, which put tons of "operators" out of work. But that also opened up massive new innovations, including the internet. I don't think anyone would argue that the jobs created due to more efficient telephone switching have so far surpassed the jobs lost from no longer needing operators to connect one party to another.

Yes, Grove has an important point in the middle of all of this, about the potential loss of key knowledge and expertise that is needed for the next generation of innovation, but he's cherry picked the other examples, without realizing the very real and very serious downsides to protectionism and to having government policy pick which industries (and which players in those industries) are "winners" and which are "losers."

In the end, the article is thought-provoking, and is at least making me reconsider some aspects on how we handle knowledge transfer for future innovation. But mostly the suggestions seem to go too far in heavy handed government involvement in propping up less efficient businesses, just to keep jobs local, even if it comes at the expense of future innovations that actually will (despite Grove's claims) create the jobs of the future.

from the that's-all? dept

Last week we linked to a story about slowing export growth from China and wondered what it meant about both the US and Chinese economies. Obviously, slower trade could be a reflection of a weakening economy, although it also seemed possible that the mounting concerns over the quality of Chinese goods could be a contributing factor. Today, the Wall Street Journal notes the same trend, but offers a much more sanguine perspective. The claim is that the Chinese government has instituted a new tax on exporters, which will kick in later this year. As such, manufacturers have tried to front-load their sales, squeezing as much of their annual orders out before the tax comes into place. The Chinese government has tried hard in recent years to slow down the economy, which has been on fire. While this tax may result in a temporary slowdown, it's unlikely that it will do much to alter the fundamental economic equation of high American demand for cheap supply from China.

from the no-simple-fix dept

In recent months, there have been a spate of stories about defective or dangerous products being exported from China. These include everything from toy train sets to toothpaste laced with poison. The conventional thinking is that this poor quality control is the result of a rapidly growing economy outstripping the capabilities of regulators, but that these issues will inevitably correct themselves over time as the economy matures. Writing at Knowledge@Wharton, Paul Midler offers a slightly contrarian stance, arguing that poor quality control, or "quality fade" as he calls it, is actually to be expected from a maturing economy (via Evolving Excellence). Basically, the inattention to quality is a result of cutthroat price competition and the attendant margin pressures faced by exporters. It's well known that Chinese exporters don't enjoy good margins, so for commodity products (like a tube of toothpaste), substituting inferior ingredients may seem like the only way to make a buck. The effects are exacerbated by pressure to demonstrate a fast ROI on new infrastructure investments. The perverse consequence is that companies that have recently expanded their capacity often try to raise prices (or skimp in other areas), so as to rapidly justify the expansion, which turns the concept of economies of scale on its head. Ultimately, China is likely to end up like its neighbors (Japan, Korea, et. al.), which once were known for their inferior goods but eventually got their act together. But this transition won't happen overnight and in the meantime, market demands could get in the way.